NFIB

Keeping Good Records
10/ 17/ 2002

by Vicki Gerson

As a small business owner, there are many people counting on you to keep good records.

The IRS expects you to keep good records to support items reported on your tax returns and keep track of deductible expenses. Your CPA expects you to keep good records so he or she can prepare your tax return and prepare financial statements. Your creditors expect you to keep good records so they can be paid promptly. And your customers expect you to keep good records so credits can be issued if necessary and the correct products can be delivered on time.

Keeping good records also helps you monitor your business. When you are trying to grow your business, it’s important to look back from month to month and year to year and take note of the areas in which you see your greatest strengths and weaknesses.

There are other options besides stuffing filing cabinets for keeping your records. Although it may be important to keep a paper trail at times, CDs, microfilm and zip disks all offer easy retrieval of information and economic use of space. If no one in your office is tech savvy, you can hire someone to scan your records onto electronic files. You might consider keeping copies of these files off-site in case of a disaster such as flooding or fire in your office or building.

Before implementing a new storage system, decide if you can dispose of any records. The IRS says business owners need to keep records for seven years. Check with your CPA and see if he or she recommends keeping business records longer then that. You know your business. Is there the potential for a lawsuit for any reason? If so, keep all pertinent records. When in doubt, keep the information in a separate filing cabinet on or off-site.

Small Business Sound Off
Does this story hit home?  Share your story with us